The corporate regulator’s proposal for the Financial Services and Credit Panel (FSCP) is not ideal as there are only industry participants and no consumer voice, according to Maurice Blackburn.
In its submission to the Better Advice Bill the law firm said having only industry participants would mean the system effectively only had industry figures judging the behaviours of other industry figures.
The submission pointed to the proposal that said the list of eligible persons on the panel could include representatives from the financial services industry such as financial advisers and financial services licensees, as well as people with experience in other fields, such as law, economics, accounting and tax.
The proposal said: “To be appointed to the list, the Minister must be satisfied that the person has experience or knowledge in at least one of the following fields:
- Administration of companies;
- Financial markets;
- Financial products and financial services;
- Taxation; or
- Credit activities and credit services.”
“We believe this list of eligible persons would be enhanced by having the consumer voice represented,” Maurice Blackburn said.
“It would be difficult for consumers (including victims of poor corporate behaviours) to have confidence in a system where their voice is not imbedded in the decision making process.
“We believe a simple adjustment could be made to the draft materials, to the effect that consumer voice such as from an appropriately qualified consumer representative (for example an employee of the Consumer Action Legal Centre, Financial Rights Legal Centre or Public Interest Advocacy Centre) is always required during these panel hearings.”
The law firm said the Australian Securities and Investments Commission’s (ASIC’s) draft panel model might not earn consumer confidence.
“Aside from the lack of consumer voice in the process as described above, consumers would be right to be dubious about who is assessing the behaviours of financial advisors against agreed standards – especially if those assessors are drawn from within the industry,” the submission said.
It also recommended that conflicts of interest in the draft only related to the chair and that conflict of interest provisions needed to be applied to all panel members.